NEW DELHI: After a strong double digit growth of 14% in October, the Indian automobile industry saw the growth moderating to 3.18% to 1.65 million vehicles driven by companies resorting to inventory correction in line with the market demand, Diwali holidays and production loss on account of Chennai floods.

As for the two wheeler segment, the motorcycle sales grew at 1.58% to 8.86 lakh units, whereas scooter sales grew just 2.45% at 3.95 lakh units, much below 5.25 lakh units sales seen in October, clearly indicating inventory correction. The overall commercial vehicle sales grew at 8.56% at 51,766 units.

Abdul Majeed – Partner at Price Waterhouse says the growth is not broad based. Some segments such as commercial vehicles are growing with potential uptick in the overall economic activity while other segments such as passenger vehicles are growing due to positive factors such as low interest rate, lower fuel prices including the pent up demand, OEM’s are playing their part with exciting launches at very attractive prices and deep discounts on some name plates. Two wheeler volume remains flat mainly due to lower off-take especially in the rural market.

"In order to have a sustained growth in the Indian automotive industry, it is absolutely necessary to have a robust growth in the overall economy which in turn depends lot more on the next level of reforms including introduction of GST," added Majeed.

The sales numbers announced by automotive industry body - Society Of Indian Automobile Manufacturer's Association are of despatch numbers - from factory to dealerships, which is different from direct sales to consumers.

The cumulative passenger vehicle sales for April to November grew 8.87%, the commercial vehicle sales were at 8.08%, the three wheeler sales was in red at -6.60% and two wheeler segment posted a marginal growth of 1.69% in April to November period driven by festive buying.

While the overall automobile exports cumulatively grew from April to November of FY-16, for the month of November alone however saw all the segments declining - passenger vehicle exports were down 8.60%, commercial vehicle exports were down 2.88%, three wheeler exports were down 34.74% and two wheeler were down 17.13% - pulling down the overall exports for November by 17.61%.

In fact, segment leaders like Maruti Suzuki, Tata Motors and Hero MotoCorp have reported de-growth of 34.3 per cent, 45 per cent and 20 per cent, respectively giving a clear indication of a prolonged slowdown in the sector.